UK pig producers enjoying higher share of retail pot as prices continue to rise

UK pig prices are continuing to rise, helping producers secure a higher percentage of the retail pork price.

The EU-spec SPP rose by another 1.2p/kg during the week ended October 1 to reach 142.23p/kg, almost 13p higher than the same point last year.

The rising domestic price is continuing to be supported by significant Chinese demand, coupled to the currently strong EU price and weak pound, which is continuing to weaken.

In early trading on Friday, the pound was trading close to £1 = €1.11, a five-year low and a marked contrast to a year ago when £1 was worth around €1.35.

Low growth forecasts and low interest rates, coupled with the uncertainty around Brexit means the value of sterling is not expected to rise significantly in the short term, according to AHDB market specialist manager Stephen Howarth.

Meanwhile supplies look set to remain. Estimated slaughterings were back slightly on the previous week, down 3 per cent to 174,300 head, and 6 per cent down on a year ago.

The higher prices mean pig producers’ share of retail pork prices has now been rising for six consecutive months, reaching 37 per cent during September.

This was 1 per cent up on the previous month, and 2 per cent higher than the same period last year. However, the share still remains 3 per cent lower than the 40 per cent stake enjoyed by producers during September 2014.

As producer prices have increased, the retail price remained static during September and 1 per cent below the same point in 2015.

Lower EU consumer demand 

At EU level, consumer demand for pig meat in key markets has remained under pressure in 2016, with consumption generally falling back despite favourable prices.

For fresh pork, the summer barbecue season in northern Europe got off to a slow start, despite the European football championships, but, as the weather improved, demand for grilling cuts subsequently rose.

In Germany, the largest market in the EU, household purchases by volume of fresh pork were down by nearly 5 per cent. France and Italy also saw lower demand, as did the UK.

AHDB Pork is also reporting that the volume of pork traded between the 28 EU Member States declined by 5 per cent in the first half of 2016, compared with the first half of 2015.